Union Budget Review 2012-2013 on SME, IT and GST

This article was published on: 17/03/12 12:00 AM

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In this Union Budget of 2012-13 no significant reforms are seen and the review is mixed. The deficit of 5.1% for 2013 is disappointing. The overall budget for the small and medium IT sector is not encouraging apart from some promises on GST, which affects the SME, IT and eCommerce.

The Service Tax has been raised from 10% to12%, which will definitely hit the demand for domestic software services and effect small and medium local IT players. The rise in the technology spending towards Unique identification authority of India (Aadhaar project) , LPG transparency portal is good news for IT but no special attention towards transparency inallocation of such project to smaller IT service providers. The budget is silent on the ambiguity on taxation on software product and services.

Overall rise in excise duty from 10% to 12% except textile may marginally benefit the textile industry but overall has dampen the spirits of the end consumer.

The India Opportunities Venture Fund of 5000 cr. sponsored by government through SIDBI will boost the MSME and is good news for start-ups and entrepreneurs.

The increase in funds (doubled from 1000 to2,500 cr. ) for National Skill Development Corporation will benefit the SME to employ more skilled labour. The generalising of income exemption and raising to Rs.2,00,000/- is a good move in this budget.

The introduction of GST by August 2012 will boost overall performance in the SME sector. The setting up of GST dispute settlement authority is a good move.  The common GST Network (GSTN) setup for filing returns will streamline tax functions from SME.  The multiple taxpoints will be eliminated and uniformity of tax will give SME a better workspace. The compliance process in the complete supply chain will become simpler. Uniformity across the country will help Chain stores across different statesand also simplify eCommerce and eRetailing. It is good news for business software providers who will do away with the nightmare of dealing with various compliances and statutory needs in different part of the country.

Contributor – Vineet